• Zimbabwe and the IMF have agreed to a 10-month Staff-Monitored Programme aimed at restoring policy credibility and rebuilding trust with international creditors rather than providing immediate financing
• The programme focuses on fiscal discipline, conservative budgeting and expenditure control as Zimbabwe remains locked out of concessional funding due to  external arrears
• Successful implementation is seen as a critical step toward reopening talks on arrears clearance, debt restructuring and eventual re-engagement with multilateral lenders

Harare - Zimbabwe and the International Monetary Fund have agreed to a 10-month Staff-Monitored Programme (SMP), a move aimed less at securing immediate funding than at rebuilding trust with international creditors after years of financial isolation.

The programme comes at a moment when the economy is showing signs of stabilisation.  Zimbabwe’s economy expanded by more than 6.6% in 2025, supported by agriculture, mining output and tighter macroeconomic management.

However, growth is expected to slow to around 5% in 2026, highlighting the need for policy discipline to prevent renewed instability.

IMF mission chief Wojciech Maliszewski said the SMP is intended to lock in fiscal restraint and prevent the return of budget slippages that have previously derailed recovery efforts.

“The programme supports the authorities’ commitment to prudent budget execution and sound expenditure control,” Maliszewski said, noting that spending in the first half of 2026 will be guided by conservative revenue assumptions to ensure expenditure remains within available resources and avoids the build-up of new domestic arrears.

Unlike a traditional IMF financing arrangement, an SMP does not involve any disbursement of funds. Instead, it functions as a policy credibility tool.

The government commits to a set of economic and institutional reforms, while the IMF tracks performance and publishes assessments.

The country does not owe the IMF itself, but it remains shut out of concessional funding from institutions such as the World Bank and the African Development Bank because of long-standing arrears. Demonstrating policy consistency under an SMP is therefore a prerequisite for reopening discussions on debt relief.

The IMF has been explicit that progress under the programme would help create the conditions for talks on arrears clearance and debt restructuring.

Zimbabwe’s previous SMP, which ran from 2019 to 2020, faltered as inflation accelerated and policy coherence weakened a history that continues to inform creditor caution.

Zimbabwe’s debt challenge remains central to its economic constraints. Total public debt is  currently circa US$23.4 billion, with roughly US$7.7 billion in arrears. This has effectively locked the country out of low-cost, long-term external financing.

In the absence of access to concessional loans, the government has relied heavily on budgetary resources to fund infrastructure and development programmes.

This approach has come at a cost, contributing to inflationary pressures, liquidity stress and the accumulation of unpaid obligations to domestic suppliers and contractors.

The result has been a cycle in which growth is periodically achieved but remains fragile, constrained by financing costs and persistent fiscal vulnerabilities.

The recent rebound in economic growth has not translated into meaningful fiscal flexibility. While output has expanded, debt servicing pressures and contingent liabilities continue to crowd out productive spending.

This is why the current SMP focuses narrowly on budget discipline and expenditure control rather than stimulus. The IMF’s priority is to ensure that recovery does not rest on inflationary financing or off-budget liabilities, particularly through state-owned entities.

Tighter fiscal controls under the SMP could have social consequences. Anchoring expenditure to conservative revenue projections limits the government’s ability to expand social programmes or respond to shocks, at a time when living costs remain elevated.

The African Development Bank has previously warned that Staff-Monitored Programmes without accompanying financial support can be socially and politically difficult to implement, especially in countries with high poverty levels. Without external funding to cushion adjustment, fiscal restraint risks translating into pressure on health, education and social protection spending.

A notable element of the programme is the IMF’s focus on governance risks linked to the Mutapa Investment Fund, which holds several strategically important but heavily indebted state enterprises.

Under the SMP, Mutapa is expected to avoid contracting new debt without explicit approval from the Ministry of Finance, Economic Development and Investment Promotion.

This reflects concerns that opaque borrowing or weak oversight at state-owned entities could undermine fiscal consolidation efforts and add to the government’s contingent liabilities.

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